Legal Threats: Facing Theranos' Lawyers

Like most Americans, or at least most Americans of my race, class, and gender, what I fear most is not assault or loss of political rights (though I am definitely keeping an eye on those), but being involved in some kind of protracted legal dispute.

A lawsuit, which is almost always both lengthy and expensive, seems to me like the most horrific experience someone can go through without the actual fear of bodily harm. Lawsuits replace combat as a way of settling disputes, and the threat of violence has been replaced by legal action. The idea that some people indulge in them frequently seems insanely perverse.

To succeed, you need a good idea, chutzpah, and expensive lawyers

Elizabeth Holmes sees into your gullible soul

So that was what particularly struck me about John Carreyrou's Bad Blood, the story of Elizabeth Holmes and the bizarre fraud of Theranos: the terrifying lawyers, the brutal NDAs, the harassment, and the legal threats that faced anyone who crossed Holmes and her partner/BF Sunny Balwani.

First off: tremendous book, totally fun, both informative and entertaining. I listened to the audio, but whatever the format, you won't be disappointed.

Partway through the book, the author, Carreyrou, appears as a character, describing how he first heard of the story, how he researched it, how he reported it. At first this seems odd. "How I got the story" is kind of a tyro journalistic approach.

Carreyrou as a character in the drama

But there was a good reason for doing it this way, because only part of the story is digging into Theranos' claims, malfunctioning gadgets, and breathtaking "fake it 'till you make it" attitude. The rest of it is the savage reaction of Holmes and Balwani. They made many attempts to stop the publication of Carreyrou's first piece in the Wall Street Journal, up to lobbying the WSJ's owner, Rupert Murdoch, an investor in Theranos, to kill the story. To his credit, he upheld the wall between business and editorial.

Like most things, this has been going on since ancient Sumer

Imagine being a regular person, skilled at your job, happy to be working at a place that seems to be doing cool things, and then slowly realizing that nothing is as it seems, and you are, in fact, party to a tremendous fraud. But when you try to tell someone about it, you discover that the non-disclosure agreements (NDAs) that you signed forbid you to discuss anything you learned, and that they contained non-disparagement clauses that leave you open to legal action if you criticize your former employer in any way.

Eventually this all came out, through Carreyrou's dogged reporting. But what struck me was the fact that this was a high-profile company with a non-functioning product, which did attract the attentions of a top journalist. What about other employees, and lower profile companies, who have signed similar agreements?

How much more of this is there?

How often does this go on? Now, it would be silly to claim that corporate litigation is some kind of sign of our decadent age. Inventors, investors, and customers have all be merrily suing each other for centuries, sometimes in cases that stretched for decades. Some people think that after their historic flight at Kitty Hawk, the Wright Brothers settled down to a career as patent trolls, not really bothering to invent anything else (note that there are those who dispute this characterization).

But aside from the fraud, the implacable legal threats were the most fascinating part of the story. It gives one pause to think of how many horrendous stories are kept silent by CEOs and companies that are just a bit less mediagenic and visible than Elizabeth Holmes and Theranos, but equally ruthless.

How many lawyers do you have on retainer?

Dismaying to think how many one-lawyer businesses there are in this country.